Correlation Between Lifevantage and BRF SA

Can any of the company-specific risk be diversified away by investing in both Lifevantage and BRF SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lifevantage and BRF SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lifevantage and BRF SA ADR, you can compare the effects of market volatilities on Lifevantage and BRF SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lifevantage with a short position of BRF SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifevantage and BRF SA.

Diversification Opportunities for Lifevantage and BRF SA

0.25

Correlation Coefficient

Lifevantage  BRF SA

Modest diversification

The 3 months correlation between Lifevantage and BRF is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and BRF SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRF SA ADR and Lifevantage is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lifevantage are associated (or correlated) with BRF SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRF SA ADR has no effect on the direction of Lifevantage i.e., Lifevantage and BRF SA go up and down completely randomly.

Pair Corralation between Lifevantage and BRF SA

Given the investment horizon of 90 days Lifevantage is expected to generate 2.2 times more return on investment than BRF SA. However, Lifevantage is 2.2 times more volatile than BRF SA ADR. It trades about -0.04 of its potential returns per unit of risk. BRF SA ADR is currently generating about -0.11 per unit of risk. If you would invest  1,836  in Lifevantage on December 26, 2024 and sell it today you would lose (371.00) from holding Lifevantage or give up 20.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lifevantage  vs.  BRF SA ADR

Lifevantage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifevantage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

BRF SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRF SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lifevantage and BRF SA

The main advantage of trading using opposite Lifevantage and BRF SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifevantage position performs unexpectedly, BRF SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BRF SA will offset losses from the drop in BRF SA's long position.

The idea behind Lifevantage and BRF SA ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.